Updated April 15, 2020.
This article was updated April 15, 2020 with the announcement of more Amazon affiliate commission decreases. I originally published this in 2017 when Amazon slashed commissions the first time. This is part 2 of what seems to be Amazon’s aim to ultimately cut out affiliates and take over online retailing.
I guess Bezos figured he needed a raise. Actually, I don’t blame Bezos. Amazon’s latest commission cuts are merely a business decision. If they can gain a competitive advantage reducing costs, that’s what they’ll do.
It’s ironic though. Amazon pretty much introduced affiliate marketing to online e-commerce merchants. Merchants who failed to roll out competitive affiliate programs lost out on traffic and sales. Now that Amazon dominates, they’re rolling back their affiliate program. Will other merchants follow suit or see this as an opportunity to build up more cozy relationships with affiliates? Time will tell.
The big question is whether it’s time to ditch Amazon as an affiliate?
Maybe. Their commissions are pretty much pennies now. The trouble is Amazon converts well and pretty much everybody in the USA and several other countries have an account there.
The smart answer: IMO, Amazon should be a supplementary revenue driver instead of primary driver. Whatever niche you’re in, I think it’s time to find a more lucrative revenue source. By all means keep promoting Amazon, but reduce your expectations and change focus.
I’ve been around long to have weathered online shake-ups such as the first Google Penguin and Facebook Reach reduction to name 2 that impacted me.
Now Amazon, a long-time darling merchant for tens of thousands of affiliates, is changing its affiliate commission rate which will largely hurt most affiliates who do decent volume.
Ironically, I’ve long wished that more of my revenue was via Amazon. I typically earn $1,500 to $2,500 per month with Amazon which is okay but nothing like 5 and 6 figure monthly earners.
Amazon’s impending March 2017 and subsequent April 2020 affiliate commission structure change hammers home the importance of having diversified revenue streams. I’m fairly diversified, which probably restricts optimal earning many months, but it’s a hedging strategy that more or less means I can weather big changes by a single entity.
Since I don’t do huge Amazon volume and since I’m not in a niche hit hard by the commission change (i.e. toys, video games, computers), I won’t notice this change at all. But I do feel for affiliates doing big volume in the hard-hit niches and product lines.
I suspect all this week many affiliates are researching alternatives to the Amazon affiliate program that will minimize lost revenue.
This post provides a list of Amazon affiliate options as well as discusses some other options you have.
Table of Contents
- The Quick n’ Easy Alternative = DISPLAY ADS
- The Hard but MORE MONEY Alternative = DROPSHIPPING
- The Cold Hard Truth
- Old vs. New Commission Structure
- Amazon’s latest commission restructuring (slash-job) as of April 2020 (OUCH!)
- Is Amazon Making a Mistake by Lowering Commissions?
- Amazon Affiliate Program Alternatives
- How to test new merchants?
- Before Going Nuclear, Figure Out How Much You’ll Actually Lose?
- It’s Not Necessarily All Bad…
The Quick n’ Easy Alternative = DISPLAY ADS
This is easy for me to say, but the quick n’ easy alternative at this point is to start deploying ads on your site. Ads pay well. Actually during Coronavirus they don’t pay well, but it’s temporary whereas the slashed Amazon commissions will be permanent.
I suggest checking out Ezoic to earn decent ad revenue. You only need 10K monthly page views. Ezoic will split test ads all over your site in an effort to generate you the most revenue. I use Ezoic on several niche sites.
If you go the ad route, it’s time to rethink article topics. Instead of focusing on your usual product promotion, start publishing informational content. You might, in fact, find this liberating because you can write/publish about anything you like in your niche. I used to focus on affiliate promotions for years. When I switched to display ads, it was liberating. More importantly, my niche site revenue sky-rocketed over the years.
If you don’t like the idea of switching to an ad-based model, keep reading, although options are limited.
The Hard but MORE MONEY Alternative = DROPSHIPPING
If you have traffic to buyer intent content that sells Amazon products, another option that could prove to be far more lucrative is to start dropshipping the stuff yourself. You might not enjoy the same conversion percentage, but your margines will be many times that what Amazon offers.
If you like the dropshipping idea and are prepared to roll up your sleeves to make it happen, check out how these guys do it very, very successfully.
The Cold Hard Truth
Below I offer up a number of Amazon affiliate alternatives, most of which I’ve used at some point over the years.
However, here’s the cold, hard truth. Few merchants in the physical product space converts as well as Amazon. You can drive traffic like crazy but if you don’t get conversions, you got nothing.
That said, it’s time to test new merchants. Fortunately testing is pretty easy.
Old vs. New Commission Structure
Old Commission Structure
The old commission structure rewarded performance. The more you sold, the higher the commission rate.
Amazon Commission Structure as of March 1, 2017:
So, if you were a successful affiliate earning 8%, it’s possible your earnings will be cut by 20% to 50%. If you earn $50,000 per month, that’s a $10,000 to $25,000 haircut.
Amazon’s latest commission restructuring (slash-job) as of April 2020 (OUCH!)
Is Amazon Making a Mistake by Lowering Commissions?
Who am I to question Amazon’s business strategy? The company is the uindisputed king of ecommerce. It was unstoppable in 2017 and still unstoppable in April 2020.
In fact, I really don’t know how much affiliates contributed to its success over the years. I suspect affiliates have helped grow the company, if not with direct sales, via exposure. With hundreds of thousands of sites recommending Amazon, that certainly must have helped built Amazon’s brand.
Now that Amazon is a household name, they are less dependent on brand building and can focus on improving profit margins. The can improve margins by lower expenses such as affiliate commissions.
I doubt this move will hurt Amazon at all.
In fact, and here’s the kicker… unfortunately, even at lower commission rates, Amazon is still the best option for many niches. However, I do urge you to test other merchants. You may be very surprised. For instance, I earn WAAAAAAAY higher earnings per click with non-Amazon merchants with one of my niche sites, so it goes to show you that Amazon is NOT the only game in town.
If you believe these changes are going to hurt your revenue big time, consider some alternative affiliate programs, which are as follows.
But, before going severing your ties altogether with Amazon, take a few moments and figure out exactly how much you’ll lose…I provide a link to a free tool to help you figure out your potential losses below.
Amazon Affiliate Program Alternatives
1. Google Shopping
Yes, that’s right, Google Shopping has an affiliate program on CJ.com. Read the details here.
I’m in as an affiliate. I haven’t done much promotion but I’m going to start. I suspect conversions won’t be as good as Amazon for now, but if Google is in it for the long haul, I suspect given the potential amount of money involved, they’ll grow online retailing market share over time.
And get this… as of April 2020, Google Shopping commissions range up to 8%. Google is hungry. They offer great affiliate support. They send affiliates a lot of emails asking to promote. They are hungry and keen to grow which means they are willing to share the wealth… for now.
I haven’t done much promotion to date just because Amazon worked well, but it’s now time to send Google some traffic for a change. After all, Google sends me traffic, I might as well return the favor, right? Haha.
Walmart is playing catch up with e-commerce. They’re hungry. They have great prices. They sell tons of stuff. They do convert.
Is Walmart a viable alternative?
Yes and no. Walmart pays a flat 4% commission. If you promote product lines at Amazon paying less than 4%, you may want to give Walmart a shot.
Otherwise, at 4% Walmart isn’t exactly a solid alternative.
In fact, Walmart may want to consider Amazon’s lowering of commissions as an opportunity to attract more affiliates. Walmart could invest a ton of cash into its affiliate program, be more flexible in accepting affiliates (it’s not easy to get approved) and of course bump commissions to 6% or higher and offer a 30 to 90 day cookie.
The way I see it is while commissions hurt Walmart’s margins in the short term, what Walmart needs is for more people to open e-commerce accounts. Once people have accounts and join any special programs they offer, those customers are more likely to buy in the future.
Walmart should seriously consider this as a massive opportunity since many Amazon Affiliates may well be looking for alternatives throughout 2017.
AliExpress has some great deals and they sell a lot of different products, but there’s 2 problems with switching from Amazon to AliExpress.
a. Conversion: I suspect Aliexpress does not convert as well as Amazon, at least for western countries. I don’t know for sure, but I suspect this is the case.
b. Commission rate: AliExpress’ commission rate tops out at 4% and in order to hit that you need to generate $1,000,000 in revenue for any given month. That means even if you sell a ton of stuff, you won’t earn more than Amazon’s 4%.
That said, you can promote AliExpress via Skimlinks. Since AliExpress is a preferred Skimlinks merchant, the average commission is around 9% via Skimlinks. It MAY be worth promoting AliExpress via Skimlinks.
At the end of the day, I doubt you’ll do better with AliExpress than sticking with Amazon… but if you’re taking a revenue bath, it’s worth testing.
I’ve never promoted Ebay as an affiliate, so I’m totally unfamiliar with them. However, on Skimlinks, it sets out the average affiliate commission rate as 7.39% which is much better than 4%.
Ebay is a recognized and trusted online merchant so conversion is probably decent.
I did a little reading about the Ebay affiliate program and it seems that its affiliate program pays more on a cost per click basis, which is calculated on the quality of traffic you send their way. If this is still the case, your particular commission rate is unknown.
Actually, I’ve never seriously considered promoting Ebay, but the cost per click angle sounds attractive. I just may give them a shot.
If you’ve been hit hard by the new Amazon commission structure, you may definitely want to give Ebay a shot.
5. Individual Merchants?
I earn way more per click promoting individual merchants that focus on selling products serving a product vertical than with Amazon. Yes, I will continue promoting Amazon, but when you find one or two niche merchants that convert, they can outperform Amazon significantly. There are 3 reasons for this:
a. Higher conversion rate because of more variety and/or better products: Because the merchant focuses within a niche, they may offer better product selection and therefore convert better.
b. Higher commission rate: Many niche merchants pay a higher commission than Amazon.
c. Longer affiliate cookie: Amazon is unique with their absurdly short affiliate cookie (24 hours). Most online merchants offer at least a 30 day cookie. I know firsthand that longer cookies help increase revenue.
The problem, though, with individual merchants is in some niches you simply won’t find merchants that pay a higher commission than Amazon, even after Amazon’s lower commissions. For instance, Best Buy pays some ridiculously low percentage across different categories. It’s not even worth linking to.
On the flip side, Samsung pays 6% to 8% via Skimlinks, which is quite high for a technology merchant. Compare that to Best Buy and Amazon’s new technology commissions and you’ll agree it’s good. Of course the problem is you can only promote Samsung products leaving you scrambling to find decent options for non-Samsung products.
I think overall, it will be harder for physical product tech niches to deal with this. Most merchants pay very little.
BUT, other than technology hardware there are many viable merchants you can promote that pay reasonably well.
A quick way to research other merchants is checking out the following affiliate networks that have plenty of physical product merchants:
- Skimlinks (the merchant directory is huge so you can find opportunities there whether you use Skimlinks or not);
- Impact Radius
- Affiliate Window
I currently use Skimlinks, but I use them not as most people do, but instead as a backup merchant.
What I don’t do is deploy Skimlinks sitewide which changes all affiliate links to Skimlinks. I tested this and earned quite a bit less.
What I do instead is when I want to promote a particular merchant with whom I don’t have an affiliate account for whatever reason, I create a custom Skimlink for that merchant. Also, if a particular merchant is a preferred or elite merchant with Skimlinks, the commission can be very good. AliExpress is an example.
Another aspect of Skimlinks I like is some merchants don’t have in-house affiliate programs and aren’t listed with an affiliate network. They only offer affiliate relationships via Skimlinks and/or Viglinks. This is another reason I have an account.
Here’s a screenshot of a few VIP merchants. As you can see the commissions can be good. I think there are 20,000 merchants with Skimlinks so the merchant search function alone is worth using.
What about Viglinks?
I have an account with them too, but my beef with them is you need to apply to many merchants inside the system. If I’m going through that in their system, I’ll just apply directly to the merchant.
With Skimlinks, once you’re approved, you’re approved for all merchants. That makes it easy as a great backup affiliate option for a huge variety of merchants.
7. AdSense/Display Ads?
Am I really including display ads as an alternative to affiliate links promoting Amazon?
Yes, I am. While AdSense will never outperform a decently converting affiliate promotion web page, you never know now, depending on the niche you’re in. If you’re in the video game niche, your commission rate just went from 8% to 1% with Amazon. AdSense may be a better option.
Or you can hedge by keeping the affiliate links on the page and also display ads. I do this quite a bit too.
8. Shift Strategies?
a. Adjust product lines you promote
In some instances you might be able to shift product line promotion to something related. If you’re really fortunate, you can incorporate some digital products, which usually pay high commission rate.
The point here is if you think you’ll take a big hit (read the next section to learn how you can quickly calculate exactly how much you’ll lose), you may want to consider how you can adjust the promotions on your website.
b. Change up your content
Another option is to publish more content that doesn’t promote products and instead is monetized with display ads. I earn pretty well with display ads (more than affiliate commissions) so I wouldn’t rule it out.
Even if you’re clearly in a product-oriented niche, there is always pretty much unlimited content you can publish related to that niche which can be monetized with display ads.
c. Change merchants
Amazon isn’t the only online retailer. There are great merchants in every niche. Seek them out and hopefully some of the good ones pay a higher commission than what Amazon is now paying. Test them to get results.
d. Dropship the stuff yourself
If you get traffic that sells products, the heavy-lifting is done. Instead of settling for a measly 3%, earn 20% or more via dropshipping. Yes, there’s legwork involved, but it’s better than rolling over and playing dead. Learn more about dropshipping here (these guys really know what they’re doing).
e. Switch to display ads as your primary rev. source
As mentioned, if you don’t relish becoming a dropshipper or testing other merchants, shift to an ad-supported revenue model. I did years ago and not once have I regretted it. I earn way more with ads and love it. Ads are the lazy person’s way to making money online.
How to test new merchants?
If you have traffic to your buyer intent website, testing other merchants is easy. Choose one or a few of your highest traffic buyer intent articles and swap out the merchants you promote. Run that for a week and check results. Then test another… and another and so on.
Hopefully you’ll stumble on an alternative merchant that out-earns Amazon.
What if no merchant earns anywhere close to Amazon, even Amazon’s reduced commissions?
That’s a tough nut to swallow, but you’ll have to adjust. You’ll have to adjust your Amazon revenue downward. Going forward you may have to adjust your content and revenue strategies.
Before Going Nuclear, Figure Out How Much You’ll Actually Lose?
Before you start swapping affiliate links and cursing Amazon forever, take a step back and figure out exactly how much you stand to lose. It may not be as much as you thought. Let’s hope this is the case.
How you can quickly calculate your lower Amazon affiliate revenue?
My fellow Canadian and friend Jon Haver created a spreadsheet (it’s free) that will automatically calculate how the new Amazon commission structure will impact you based on past earnings.
For example, Jon used his spreadsheet to learn that he would have earned 24% less in November and December 2016 under the new commission structure.
The spreadsheet is pretty cool. It’s set up to automatically calculate your losses (or if lucky gains) by importing your Amazon Associate report data.
Visit Jon’s blog post here which is where you can access his report.
It’s Not Necessarily All Bad…
Significant changes like this aren’t all bad… it ain’t great, but it ain’t all bad.
After Google Penguin, there was a huge SEO opportunity if you avoided spam links (an opportunity I didn’t capitalize on, but wish I had looking back).
After the Facebook Reach Algo fiasco… well I can’t think of any opportunity there. That was a gravy train I wish never ended. It was a super sweet gig while it lasted. Another opportunity I wish I had milked more.
Where’s the Opportunity Here?
1. Less money means less competition. Obviously publishers will continue promoting Amazon, but on the whole there will be some drop outs… especially if the revenue fallout is bad.
Those that stay the course may see traffic grow which is always a good thing.
Who knows, maybe there’ll be fewer horrible product reviews online that happen to rank temporarily from spammy link-building. If that’s the case, by all means pen real reviews of products and supplement the revenue with display ads. Hint – buyer intent content often generates decent ad revenue. Affiliate revenue could be gravy (or the other way around).
2. Other merchants may fill the void: I’d love to see other big merchants fill the void and invest in affiliates with higher commissions, longer cookies, more affiliate resources… all the stuff we love. I’m thinking Walmart, AliExpress, large niche site players (come on Best Buy… it’s your time to step up here) and others.
I understand that it was hard previously for other retailers to match Amazon’s commissions, but now is the time for other big retailers to embrace affiliates. I have no idea if this will happen, but we can always hope.
3. Cheap sites to buy: Sites that take a hit revenue-wise will be cheaper to buy. This could afford a great opportunity for someone who has non-Amazon monetization know-how in particular niches.
TIP: Do NOT buy a website based on trailing 12 months’ revenue right now if revenue stems from Amazon. These website valuations must be reduced to reflect the changes. I suspect many site owners are rushing their sites to market hoping to pull one over on unsuspecting buyers. Caveat Emptor.
You never know what will happen. Maybe this change will force you to make some changes that will do wonders for your online business. I know Google Penguin in 2012 forced me to make changes which in the end worked out very, very well.
Jon runs the place around here. He pontificates about launching and growing online publishing businesses, aka blogs that make a few bucks. His pride and joy is the email newsletter he publishes.
In all seriousness, Jon is the founder and owner of a digital media company that publishes a variety of web properties visited and beloved by millions of readers monthly. Fatstacks is where he shares a glimpse into his digital publishing business.